Monthly Archives: June 2012

The housing market in Calgary continues to defy gravity(and all the predictions that were calling for a crash). The biggest issue we had this spring was a shortage of attractive listings. I predicted back in the winter that we’d eventually see higher prices if the lack of inventory persisted, and that’s exactly what happened. The median price is up 9.2% compared to December.

With so little for buyers to choose from, it’s surprising to see that year-to-date sales are up 19% compared to 2011, and up 12% compared to the past three years. More complete statistics can be seen here Monthly stats update

Bidding wars update

Over the past three days, 12% of homes went for list price or higher. A home in North Glenmore which was listed for $489,500 was sold for $492,500, with an accepted offer coming after 2 days on the market. The home was purchased in 2007 for $450,000.

Two Moody’s analysts maintain that Canadians have borrowed too much and consumer debt will be the undoing of some:

‘Last week’s mortgage changes unveiled by regulators and the federal government are positive for Canada’s banks, but “may be too late to avoid a housing correction,” according to analysts at Moody’s Investors Service.’

Today there’s another article in the Herald about western Canadians buying property in Arizona. What I’ve never seen analysed is the effect it’s had on the Calgary market. A good portion of Calgarian’s property investment dollar is being spent in the U.S. rather than in Calgary. I personally know of many people who have bought in Arizona. Is this an explanation Continue reading →

Bank of Canada governor Mark Carney has been warning consumers for some time not to get too comfortable, since higher interest rates are on the horizon. We think this is more of a scare tactic to get overleveraged consumers to rein in their borrowing levels, because Canada is certainly not on solid enough footing economically to raise interest rates, at least not until its trade partners do.

The problem is many Canadians aren’t listening. They’re partying like its 1999, taking on vast amounts of debt because of low interest rates and robust housing prices. While the level of household debt to GDP is falling in the U.S., it’s been increasing in Canada and now stands at more than 93 per cent.

This being the last update before the new mortgage rules were announced, it will be interesting to see how it changes over the coming weeks. Will there be a huge increase in inventory with sellers desperate to make a sale before the new rules come into effect on July 9?

Update June 21: I received an email from a mortgage broker which states the following:“If you have a client on the fence if they produce a contract within the next 2 weeks (to July 9th) they will be subject to the old rules until December 2012.”

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The government will reduce the maximum amortization period for a government-insured mortgage, lowering it from 30 to 25 years, and also drop the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent. The government expects less than 5% of home buyers will be affected by the changes.

The Plunge-O-meterguy comes up with some totally bizarre predictions. He won’t be around to be accountable, but he predicts in the year 2294(yes, that’s 282 years from now), the average price in Calgary will be $276,776. It will drop an average of $66/mo for 3383 months. http://www.chpc.biz/plunge-o-meter.html

By comparison, he predicts the demise in Edmonton will be quick. In a short 23 years, Edmonton’s average price will be $216,187.